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09
Minutes for
To:
Members of the Board
From:
Office of the Secretary
March 31, 1966
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.
Chm. Martin
Gov. Robertson
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
Gov. Brimmer
Minutes of the Board of Governors of the Federal Reserve
System on Thursday, March 31, 1966.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Robertson, Vice Chairman
Shepardson
Mitchell
Daane
Brimmer
Sherman, Secretary
Kenyon, Assistant Secretary
Molony, Assistant to the Board
Cardon, Legislative Counsel
Hackley, General Counsel
Solomon, Director, Division of Examinations
Shay, Assistant General Counsel
Hooff, Assistant General Counsel
Leavitt, Assistant Director, Division of
Examinations
Miss Eaton, General Assistant, Office of the
Secretary
Mr. Heyde, Attorney, Legal Division
Messrs. Egertson and Maguire, Supervisory Review
Examiners, Division of Examinations
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Approved items.
The following items, copies of which are
attached to these minutes under the respective numbers indicated,
were approved unanimously after consideration of background material
that had been made available to the Board and clarification of points
of information about which members of the Board inquired:
Item No.
Letter to First Trust & Deposit Company, Syracuse,
New York, approving the establishment of a branch
at 505 East Fayette Street.
1
Letter to The Cleveland Trust Company, Cleveland,
°h10, granting an extension of time to establish
a branch in Strongsville.
2
1150
3/31/66
-2Item No.
Letter to The Citizens' Bank Company, Ansonia,
Ohio, approving its application for admission to
membership in the Federal Reserve System.
3
Letter to Wachovia Bank and Trust Company, WinstonSalem, North Carolina, approving the establishment
of a branch in Asheville.
4
Letter to the Organization Committee, The Blueville
Bank of Grafton, Grafton, West Virginia, approving
the application made on behalf of the bank for
admission to membership in the Federal Reserve
System.
5
Letter to Old Kent Bank and Trust Company, Grand
Rapids, Michigan, granting an extension of time
to establish a branch at East Beltline, S.E., and
28th Street, S.E.
6
Letter to the Chairman of the House Committee on
Banking and Currency concerning a request for
work papers relating to the examination of a State
member bank.
7
Report on competitive factors.
A report to the Federal Deposit
Insurance Corporation on the competitive factors involved in the proposed merger of The First Trust Company of Allegany County, Wellsville,
New York, and The First National Bank of Cuba, Cuba, New York, was
.9.22Ipatd unanimously for transmittal to the Corporation, the conclusion
being stated as follows:
Without regard to banking factors, or to the convenience
and needs of the communities to be served, it appears the
proposed merger of The First Trust Company of Allegany County,
Wellsville, New York, and The First National Bank of Cuba,
Cuba, New York, would have an adverse effect on competition.
Existing competition between participants would be eliminated.
Moreover, the merger would represent the absorption of the
tenth small bank by Allegany County's two largest banking
institutions during the past 10 years.
1151
3/31/66
-3Aoplication of Lake City Bank (Items 8 and 9).
There had
been distributed a proposed order and statement reflecting the
Board's approval on March 28, 1966, of the application of Lake
City Bank, Warsaw, Indiana, to merge The Commercial State Bank,
Silver Lake, Indiana.
The issuance of the order and statement was authorized;
copies of the documents, as issued, are attached as Items 8 and 9.
Testimony on cease and desist bill.
Governor Robertson
referred to testimony to be given next week before the Subcommittee
on Financial Institutions of the Senate Banking and Currency Committee concerning bill S. 3158, cited as the Financial Institutions
Supervisory Act of 1966.
He noted that the first part of the bill
covered powers that would be given to the Federal Home Loan Bank
Board.
His judgment was to refrain from testifying on that part of
the bill, and other members of the Board agreed.
The second part of the bill, Governor Robertson continued,
dealt with powers that would be given the banking agencies, including
a uthority to issue cease and desist orders
and to suspend or remove
bank officers and directors.
There was also provision, for which he
did not understand
the need, whereby the Federal Deposit Insurance
Corporation would be empowered to issue subpoenas and administer
oaths
in connection with the liquidation
of banks, and he was not sure whether
the availability of such authority would
be desirable.
On the other
115"
3/31/66
-4-
hand, unless it seemed necessary to take a position, he would dislike
to oppose something like this that the Corporation had requested.
Drawing on conversations he had had with staff of the Corporation, Mr. Solomon outlined reasons why such authority might have been
sought; they had to do with the unusual complications involved in
certain recent liquidations.
After further discussion, Governor Robertson noted that the
letter sent to the Bureau of the Budget expressing the Board's views
on the bill, then in draft form, stated in rather general terms the
need for strengthening of enforcement powers.
On the basis of that
letter, he thought it would not be inconsistent to confine the
testimony to the use of such powers in the supervision of State member banks.
There was general agreement with this reasoning, and it was
understood that the testimony would be presented accordingly, in a
final form satisfactory to the Vice Chairman.
The meeting then adjourned.
11 t'<
Item No. 1
3/31/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 31, 1966
Board of Directors,
First Trust & Deposit Company,
Syracuse, New York.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
First Trust & Deposit Company, Syracuse, New
York, of a branch at 505 East Fayette Street,
Syracuse, New York, provided the branch is
established within six months from the date of
this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
1154
BOARD OF GOVERNORS
Item No. 2
3/31/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS arriciAL CORRESPONDENCE
TO THE BOARD
March 31, 1966
Board of Directors,
The Cleveland Trust Company,
Cleveland, Ohio.
Gentlemen:
The Board of Governors of the Federal Reserve System
extends to June 1, 1966, the time within which The Cleveland
Trust Company, Cleveland, Ohio, may establish a branch at 14444
Pearl Road, Strongsville, Cuyahoga County, Ohio.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 3
3/31/66
WASHINGTON, O. C. 20551
ADDRESS orriciAL CORRESPONDENCE
TO THE BOARD
March 31, 1966
Board of Directors,
The Citizens' Bank Company,
Ansonia, Ohio.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves the application of The Citizens' Bank Company, Ansonia, Ohio,
for stock in the Federal Reserve Bank of Cleveland, subject to the
numbered conditions hereinafter set forth.
1.
Such bank at all times shall conduct its business and
exercise its powers with due regard to the safety of
its depositors, and, except with permission of the
Board of Governors of the Federal Reserve System,
such bank shall not cause or permit any change to be
made in the general character of its business or in
the scope of the corporate powers exercised by it at
the time of admission to membership.
2.
The net capital and surplus funds of such bank shall
be adequate in relation to the character and condition of its assets and to its deposit liabilities and
other corporate responsibilities.
In connection with the foregoing conditions of membership,
particular attention is called to the provisions of the Board's
Regulation H, regarding membership of State banking institutions in
the Federal Reserve System, with especial reference to Section 208.7
thereof. A copy of the regulation is enclosed.
If at any time a change in or amendment to the bank's
charter is made, the bank should advise the Federal Reserve Bank,
that it may be
furnishing copies of any documents involved, in order
bank's status
the
way
any
in
affects
change
determined whether such
System.
Reserve
Federal
as a member of the
Board of Directors
-2-
1156
Acceptance of the conditions of membership contained in
this letter should be evidenced by a resolution adopted by the Board
of Directors and a certified copy of such resolution should be transmitted to the Federal Reserve Bank. Arrangements will thereupon be
made to accept payment for an appropriate amount of Federal Reserve
Bank stock, to accept the deposit of the required reserve balance, and
to issue the appropriate amount of Federal Reserve Bank stock to the
bank.
The time within which admission to membership in the Federal
Reserve System in the manner described may be accomplished is limited
to 30 days from the date of this letter, unless the bank applies to the
Board and obtains an extension of time. When the Board is advised that
all of the requirements have been complied with and that the appropriate
amount of Federal Reserve Bank stock has been issued to the bank, the
Board will forward to the bank a formal certificate of membership in
the Federal Reserve System.
The Board of Governors sincerely hopes that you will find
membership in the System beneficial and your relations with the Reserve
Bank pleasant. The officers of the Federal Reserve Bank will be glad to
assist you in establishing your relationships with the Federal Reserve
System and at any time to discuss with representatives of your bank
means for making the services of the System most useful to you.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
Enclosure.
1157
BOARD OF GOVERNORS
Item No. 4
3/31/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRCIIPONOCNCE
TO THE •OARCI
March 31, 1966
Board of Directors,
Wachovia Bank and Trust Company,
Winston-Salem, North Carolina.
Gentlemen:
The Board of Governors of the Federal Reserve System
establishment by Wachovia Bank and Trust Company,
the
approves
Winston-Salem, North Carolina, of a branch at the northeast corner of West Patton and Louisiana Avenues, Asheville, North
Carolina, provided the branch is established within one year from
the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
1
BOARD OF GOVERNORS
Item No. 5
3/31/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 31, 1966
Organization Committee,
The Blueville Bank of Grafton,
Grafton, West Virginia.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves the application made on behalf of The Blueville Bank of
Grafton, Grafton, West Virginia, for stock in the Federal Reserve
Bank of Richmond, effective if and when the bank opens for business
under appropriate State authorization, subject to the numbered
conditions hereinafter set forth.
1.
Such bank at all times shall conduct its business
and exercise its powers with due regard to the
safety of its depositors, and, except with the permission of the Board of Governors of the Federal
Reserve System, such bank shall not cause or permit
any change to be made in the general character of
its business or in the scope of the corporate powers
exercised by it at the time of admission to membership.
2.
The net capital and surplus funds of such bank shall
be adequate in relation to the character and condition
of its assets and to its deposit liabilities and other
corporate responsibilities.
3.
At the time of admission to membership, such bank shall
have paid-in and unimpaired capital stock of not less
than $150,000, and other capital funds of not less than
$225,000.
In connection with the foregoing conditions of membership,
particular attention is called to the provisions of the Board's
Regulation H, regarding membership of State banking institutions
in the Federal Reserve System, with especial reference to Section
208.7 thereof. A copy of the regulation is enclosed.
BOARD
OF GOVERNORS
1159
OF THE FEDERAL RESERVE SYSTEM
The Blueville Bank of Grafton
-2-
It is understood that the bank does not plan to exercise
fiduciary powers upon admission to membership. Should the bank
at any future time desire to exercise any powers not exercised
at
the time of admission to membership it will be necessary, under
condition of membership numbered 1, to obtain permission of the
Board of Governors.
If at any time a change in or amendment to the bank's
charter is made, the bank should advise the Federal Reserve Bank,
furnishing copies of any documents involved, in order that it may
be determined whether such change affects in any way the bank's
status as a member of the Federal Reserve System.
Acceptance of the conditions of membership contained in
this letter should be evidenced by a resolution adopted by the
board of directors after the bank's charter has been issued and a
certified copy of such resolution should be transmitted to the
Federal Reserve Bank. Arrangements will thereupon be made to
accept payment for an appropriate amount of Federal Reserve Bank
stock, to accept the deposit of the required reserve balance, and
to issue the appropriate amount of Federal Reserve Bank stock to
the bank.
The time within which admission to membership in the
Federal Reserve System in the manner described may be accomplished
is limited to six-months from the date of this letter, unless the
bank applies to the Board and obtains an extension of time. When
the Board is advised that all of the requirements have been complied with and that the appropriate amount of Federal Reserve Bank
stock has been issued to the bank, the Board will forward to the
bank a formal certificate of membership in the Federal Reserve System.
The Board of Governors sincerely hopes that you will find
membership in the System beneficial and your relations with the
Reserve Bank pleasant. The officers of the Federal Reserve Bank
will be glad to assist you in establishing your relationships with
the Federal Reserve System and at any time to discuss with representatives of your bank means for making the services of the System most
useful to you.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
Enclosure
1160
BOARD OF GOVERNORS
Item No. 6
3/31/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 31, 1966
Board of Directors,
Old Kent Bank and Trust Company,
Grand Rapids, Michigan.
Gentlemen:
The Board of Governors of the Federal
Reserve System extends to October 17, 1966, the
time within which Old Kent Bank and Trust Company,
Grand Rapids, Michigan, may establish a branch
in the vicinity of the intersection of East
Beltline, S.E., and 28th Street, S.E., Grand
Rapids, Michigan.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
1
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 7
3/31/66
WASHINGTON,0. C. 205S1
OFFICE OF THE CHAIRMAN
March 31, 1966
The Honorable Wright Patman,
Chairman,
Committee on Banking and Currency,
House of Representatives,
Washington, D. C. 20515
Dear Mr. Chairman:
This is in reply to your letter of March 25, 1966, in which
you request that we make available to Mr. Schremp the most recent
examination work papers for the completed examination of The Cleveland
Trust Company.
As you know, we have made such work papers available to
Mr. Schremp in the past covering examinations of Federal Reserve Banks.
But examinations of member banks are made with the understanding that
they will not be made public and we believe that if we made these work
papers available to Mr. Schremp it would violate this understanding
and make it more difficult in the future to conduct examinations of
member banks.
Perhaps there is some other way to provide the information
you seek. If, for example, you wish to know the scope of the examination of a trust department of a State member bank, we can furnish
you with a copy of a completed examination report for a typical bank,
with deletions where necessary to prevent identification of the bank
or other breaches of confidentiality. If, on the other hand, you want
particular information about The Cleveland Trust Company, we will
endeavor to answer your questions, as we have in the past, as fully
as possible without breaching confidentiality.
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
Wm. McC. Martin, Jr.
1162
Item No. 8
3/31/66
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
LAKE CITY BANK
for approval of merger with
The Commercial State Bank
ORDER APPROVING MERGER OF BANNS
There has come before the Board of Governors, pursuant to the
Bank Merger Act, as amended (12 U.S.C. 1328(c), Public Law 89-356), an
application by Lake City Bank, Warsaw, Indiana, a State member bank of
the Federal Reserve System, for the Board's prior approval of the merger
Of that bank and The Commercial State Bank, Silver Lake, Indiana, under
the charter and title of Lake City Bank.
As an incident to the merger,
the sole office of The Commercial State Bank would become a branch of the
resulting bank.
Notice of the proposed merger, in form approved by the
Board, has been published pursuant to said Act.
Upon consideration of all relevant material in the light of
the factors set forth in said Act, including reports furnished by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
1163
-2and the Attorney General on the competitive factors involved in
the proposed merger,
IT IS HEREBY ORDERED, for the reasons set forth in the
Board's Statement of this date, that said application be and hereby
is approved, provided that said merger shall not be consummated
(a) before the thirtieth calendar day following the date of this Order or
(b) later than three months after said date.
Dated at Washington, D. C., this 31st day of March, 1966.
By order of the Board of Governors.
Voting for this action:
Unanimous, with all members present.
(signed)
Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
1164
BOARD OF GOVERNORS
Item No. 9
3/31/66
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION OF LAKE CITY BANK
FOR APPROVAL OF MERGER WITH THE COMMERCIAL STATE BANK
STATEMENT
Lake City Bank, Warsaw, Indiana, with total deposits of
approximately $18 million, has applied, pursuant to the Bank Merger
Act, as amended (12 U.S.C. 1828(c)
Public Law 89-356), for the
Board's prior approval of the merger of that bank with The Commercial
State Bank, Silver Lake, Indiana ("Commercial Bank"), with total
1/
The banks would merge under the
deposits of about $3 million.—
charter and title of Lake City Bank, which is a member of the Federal
Reserve System.
As an incident to the merger, the sole office of
Commercial Bank would become an office of Lake City Bank, increasing
the number of its offices to three.
Competition. -
The home office of Lake City Bank is located
in Warsaw, which has an estimated population of 8,000, and the bank
operates one branch office in nearby Winona Lake, a community with an
estimated population of 1,900.
Warsaw, centrally located within
Kosciusko County, is the seat and principal community of the county
Deposit figures are as of December 31, 1965.
-2-
(population over 40,000).
Commercial Bank's sole office is in the town
of Silver Lake (population 500), which is also in Kosciusko County about
12 miles south of Warsaw.
While the service areas2/ of the two banks overlap slightly,
neither bank derives any significant amount of deposits or loans from
the other bank's service area. A branch of First National Bank, Warsaw,
is situated between offices of Lake City Bank and Commercial Bank.
The resulting bank should be an effective competitor throughout
Kosciusko County and small portions of Fulton and Wabash Counties lying
immediately south of Kosciusko County.
The Board finds that this is the
relevant area for the purpose of considering the effect of the proposal
On competition.
In addition to Lake City Bank and Commercial Bank, nine banks
operate offices within the relevant area.
With the exception of First
National Bank, Warsaw, these banks, situated at distances of sin to 16
miles from the nearest office of the resulting bank, mainly serve their
oxm communities, and consummation of the proposal should not significantly
effect them.
First National Bank, Warsaw, operates four offices within
the relevant area, and, in terms of total deposits held, is approximately
the same size as the bank that would result from effectuation of the
rnerger.
Each would hold slightly less than one-fourth of the deposits
held by all banks operating offices within the relevant area.
The Board finds that the effect of the proposed merger on
"Petition would not be adverse.
That area from vhich a bank derives 75 per cent or more of its deposits
f individuals, partnerships, and corporations.
1166
-3-
Financial and managerial resources and future prospects. Commercial Bank had satisfactory earnings until 1965 when profits
dropped appreciably due to increased operating expenses, principally
interest on time and savings deposits.
The bank operates with a low
loan-to-deposit ratio that, together with relatively heavy expenses,
renders earnings prospects no better than fair.
Lake City Bank has
capable management, satisfactory future prospects and sound financial
resources, as would have the continuing bank.
Convenience and needs of the communities. -
Silver Lake and
the surrounding area, which is devoted to diversified crops and the
raising of livestock, would benefit most from consummation of the
merger. Commercial Bank has maintained a low loan-to-deposit ratio,
and in the five-year period ending June 30, 1965, the percentage
Increase in its total loans has been less than for any competing bank,.
While there is no indication that the credit needs of the Silver Lake
area are going unserved, the proposal would provide more complete
banking services in this area and benefit to some degree the convenience
Of its residents.
Summary and conclusion. - Consummation of the proposal would
not have adverse
competitive effects.
The resulting bank would be in
C position
to improve the earnings prospects of the office now occupied
by
Commercial Bank and would be able to provide more complete and con-
venient banking services to the Silver Lake area.
Accordingly, the Board concludes that the proposal should be
approved.
/larch 31, 1966.
@FedFRASER